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Campus Budget News

Budget Update - Fiscal 2011-12

I am writing to provide updated information on the California State University system and California State University, Northridge budgets for fiscal year 2011-12 which starts July 1, 2011.

Before outlining what the 2011-12 state budget impacts mean for Cal State Northridge, let me first provide a brief summary of the University's 2010-11 budget planning.

Cal State Northridge entered 2010-11 with previous budget reductions of $21 million to resolve. The initial plan was to handle this budget reduction through 5% divisional budget cuts coupled with a 10.8% enrollment reduction as directed by the CSU Chancellor. However, 2010-11 state budget developments ultimately provided partially restored funding for the CSU system of $305 million, another $60.6 million for enrollment growth, and a 10% tuition fee increase. With this restoration and the tuition fee increase and higher enrollment, Cal State Northridge was able to rescind the planned 5% divisional cuts.

2011-12 Budget Update

The legislature passed a budget bill on March 17 which includes the Governor's proposed cut of $1.4 billion to higher education for fiscal year 2011-12 ($500 million to the California State University system, $500 million to the University of California system, and $400 million to the California Community College system).

To date, the Governor has been unable to reach an agreement with the legislature to include a ballot measure to extend temporary taxes (personal income tax, sales tax, and vehicle license fees) which expire in June. These extensions are the primary elements of the Governor's proposed solution to resolve California's remaining $15.4 billion deficit. Without voter approval of these extensions, all three sectors of public higher education potentially face much larger cuts.

The Governor's current budget, which assumes passage of the tax extensions, reduces support for the CSU by $500 million. Another $50 million of projected cost increases (e.g., health care and energy costs) must also be covered, bringing the total to $550 million. Increasing tuition fees by 10%, as approved by the Board of Trustees, effectively reduces this challenge to $400 million. Decreasing enrollment targets by 2.5% or 10,000 full-time equivalent students (FTES) reduces the challenge further to $340 million.

Cal State Northridge is currently planning to this scenario. Our share of the CSU budget reduction is approximately $21 million plus another estimated $3.5 million representing our share of the $50 million projected cost increases, with an enrollment target of 25,270 FTES, 0.7% below our current year target (25,461 FTES).

In order to meet this reduction, the campus is considering the following:

Reducing divisional budgets by 5%. Given that 2010-11 budget planning had incorporated potential 5% divisional cuts, most divisions are far along in their planning to this level of reduction.

Utilizing funds given the campus through the fiscal 2010-11 state budget and held in reserve given the tenuous condition of the state's budget.

Continuing to leverage vacancies created by attrition and retirements to reduce total personnel costs; a necessary strategy given salary and benefits account for over 80% of our total budget.

If the temporary taxes are not extended, then the Governor will need to further bridge the gap between the state deficit and anticipated revenue. Various governmental spokespersons have estimated the CSU system budget reduction may be doubled, bringing the total reduction to about $1 billion. Planning to this level will begin with the Chancellor and the Board of Trustees at the system-wide level. The direct impact to Cal State Northridge will ultimately be contingent upon system-wide strategies.

To date, the University has done well in anticipating potential economic challenges and has positioned itself to remain focused on its core mission. While the fiscal environment remains uncertain, we continue to hold funds in campus reserves that will provide flexibility for dealing with the final budget.

Please note that we continue to communicate the impact of these budget cuts to external stakeholders, including elected officials, alumni, and friends of the University. On April 5th, Cal State Northridge joined with other CSU, University of California, and Community College campuses to carry our message to state legislators:

public higher education needs long-term stable funding so that the greatest number of students can be served and students and their families can plan with more certainty,

public higher education will play a critical role in the state's economic recovery, and

public higher education will help meet essential workforce needs.

We will keep you informed as additional information becomes available, either on the Campus Budget News webpage (http://www.csun.edu/presofc/campusbudgetnews.html) or through direct messages.

Thank you for your continued good work and contributions during these trying budgetary times.

Tom McCarronVice President for Administration and Financeand Chief Financial Officer